SAP's AI Conundrum: Solid Earnings Contrast with Steep Losses as Q2 Report Nears
Published on 07/18/2026 at 13:42 | Redaktion boerse-global.de
SAP faces a crucial test of investor sentiment on July 23, when it releases second-quarter and first-half results after the closing bell. The software giant's stock has shed more than a third of its value since the start of 2026, closing Friday at €138.50 — a 1.81% daily decline and a cumulative 33.53% year-to-date rout. That puts the shares just 5.89% above the 52-week low of €130.80 touched on June 25, and 4.30% below the 50-day moving average of €144.72.
The sell-off has unfolded despite a first-quarter performance that would ordinarily command attention. SAP grew revenue 12% on a currency-adjusted basis, expanded EBIT by 24%, pushed its EBIT margin above 30%, and saw cloud revenue — the company’s primary growth engine — surge 27%. An equity ratio of 62%, coupled with ongoing share buybacks and a steady dividend, paints a picture of operational health that seems incompatible with a one-third decline in market value.
Analyst opinion, however, is fractured. UBS analyst Michael Briest lowered his price target from €205 to €164 on July 15, maintaining a Buy rating while citing the complexity of monetizing AI agents and a broader valuation adjustment. Two days later, Morningstar’s Rob Hales reaffirmed a fair-value estimate of €265 — nearly double the current share price — though he flagged the risk that geopolitical tensions over Iran could slow enterprise IT spending. The gap between these two assessments underscores the uncertainty hanging over SAP’s ability to turn its heavy AI investments into near-term revenue.
Should investors sell immediately? Or is it worth buying SAP?
On the operational front, the company has ticked off several milestones during its quiet period. The European Commission formally closed its antitrust investigation into SAP's on-premise maintenance and support practices on July 9, with the company accepting legally binding commitments for the next decade. The acquisition of data platform Dremio closed on July 6, aimed at accelerating "agentic AI" by marrying corporate data with third-party sources in real time. And on July 14, SAP issued 16 security patches, including fixes for three critical vulnerabilities in NetWeaver, Commerce Cloud, and AppRouter.
The deeper anxiety weighing on the stock stems from fears that generative AI could render traditional enterprise software — particularly ERP systems — obsolete. That concern intensified after IBM issued a profit warning that triggered a 25% slide in its own shares, casting a shadow over the entire software sector. SAP CEO Klein has publicly dismissed the threat, but the market remains unconvinced. At the same time, a broader European debate about digital sovereignty has gained traction, with Germany's digital minister Wildberger warning that the continent accounts for just 5% of global computing capacity versus 75-80% for the US. While some market observers note that German IT buyers are less inclined to rule out European software than they were a year ago, SAP has not been explicitly cited as a direct beneficiary.
Chartwise, the RSI of 47.3 points to neutral territory, offering no clear signal of exhaustion or overselling. With the stock hovering near its yearly low, the question is whether the selling has found a floor — or whether the AI disruption narrative will push valuations lower still. The coming quarterly report, which the market expects to show cloud backlog growth of around 22%, will likely tip the scales between UBS's cautious $164 target and Morningstar's more bullish €265 estimate.
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